This Agency Model is Broken, But Should We Fix It?

EDITOR’S NOTE: This article, originally published on March 21, 2013, placed at No. 4 in our 20 most popular articles of the year.

ADOTAS – Product development is the new marketing strategy. Innovation is the new creative currency. Curation is the new content. Marketing and advertising have evolved over the past five years and the shift is accelerating faster by the day. Networks like SAY Media and Glam Media are working directly with brands, giving them direct access to content. Disruptors like BuzzFeed and Percolate are taking it a step further by co-creating new content and curating entire social footprints.

Long story short, the traditional client to agency to media telephone game is a broken model. And everybody knows it.

The alternative models for success are obvious with brands like Burberry, Nike and Levi’s making great content, creating digital products with real utility, and truly partnering with their agencies. But for every Red Bull Space Jump, there are still hundreds of campaigns that are dying on the vine because consumers are exhausted from years of being talked at rather than being engaged with.

What’s the solution? Taking a page from the startup scene and borrowing liberally from The Lean Startup methodology, it’s time for agencies to pivot, test new ideas, and be ready to fail upward.

What’s Your MVP?

The first step for any startup is to define its minimum viable product (MVP) — the simplest, most concise and compelling version of the product offering. Deceptively simple, this is no easy task.

Let’s apply this methodology to agencies. Is a viable MVP writing 30-second TV spots and then outsourcing the actual making to a production company? Is it designing print ads for magazines with fewer subscribers every day? Is it creating Flash banner ads that the most affluent demographics can’t watch on their iOS devices? Framed this way, it doesn’t sound very compelling.

Now let’s take a closer look at what agencies do best: They understand brands better than anyone else and they know what consumers like. They’re also full of creative, talented people. Put that together and there’s an MVP in there somewhere. Perhaps it’s making the creative director a curator-in-chief and starting a dedicated multi-channel content factory for the right client. Or maybe it just means giving your tech director six months of freedom to create a game-changing mobile app.

The good news for agencies is that the cost of most of these experiments is basically a rounding error for your holding company. So why not invest in their own talent and put some skin in the game?

Now Pivot!

“Lean.” “Agile.” “Pivot.” Agencies use these buzzwords liberally and often advise their clients to make aggressive moves and embrace drastic change. So why not apply these principles to the agency itself?

Winston Binch and Bud Caddell are trying just that at Deutsch LA by putting digital at the forefront of the agency and refusing to separate creativity from technology. Alex Bogusky got to the top of the mountain and then ditched it for the Common project. But for every agency leader who’s ready to make a major pivot, there are ten Global Strategy Directors pitching innovation at client meetings, while secretly outsourcing the actual work to three guys in a loft in Brooklyn.

Agencies need to be ready to fail upward by experimenting, learning from mistakes and making smart pivots.

Partners Not Vendors

Of course, no agency is set up to be quick, nimble, or great at everything. In fact, as consumers’ attention becomes increasingly scattered, and campaigns become microtargeted, it’s impossible to do everything well.

Agency producers have been quietly amassing Rolodexes of secret weapon vendors for years. Now that brands are actively seeking out media opportunities with the aforementioned disruptors, and working with non-agencies like Breakfast and Fake Love, the curtain is starting to lift. It’s time for transparency and scale.

Once again, startups have benefited from this communal worldview for years — quite literally with open source frameworks like Ruby on Rails, and more recently with the increasing popularity of shared spaces like WeWork.

Exposing these relationships, and treating them as partnerships rather than procuring services from vendors doesn’t mean cutting agencies out of the equation. Nor does it mean resorting to gimmicky crowdsourcing stunts or simply awarding jobs to the lowest bidder on oDesk or Elance. It means we are entering a new era of transparency with a wide array of in-demand specialists collaborating with brands and agencies to make the whole greater than the sum of its parts.

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Matthew Carlin is a partner at Little House, where he helps brands tell authentic stories and make cool stuff for the internet and beyond. He is based in Los Angeles.

Reader Comments.

Agencies can’t fix their biz model because they’re the equivalent of a large tanker ship in the ocean. It’s big, impressive and has left a long wake (history) but it’s slow, cumbersome, does one thing well, bloated and can’t pivot. Clients want the new model but don’t know where to turn because consultants they employ keep putting the big agencies in front of them. The Anomaly and Slot Right’s of the world are the future but it’s a matter of us getting in front of clients to prove our model and the press covering our firms and not ignoring us or continue to talk up the big agencies all the time.